© Reuters. FILE PHOTO: Republican presidential candidate and former U.S. President Donald Trump speaks during a press conference at one of his properties after attending a hearing in his criminal court case on charges stemming from hush money paid to a porn star in
(Corrects share movement in paragraph 1 to 40% from 4%)
By Medha Singh and Yuvraj Malik
(Reuters) -Trump Media & Technology Group shares surged more than 40% on Tuesday in their debut on the Nasdaq that comes more than two years since its merger with a blank-check firm was announced.
At $70.46, the company’s market capitalization was $9.55 billion on an undiluted basis. Trading in the shares under the new ticker “DJT” was briefly halted just after the opening bell due to volatility.
Donald Trump’s majority stake in TMTG was last valued at $5.55 billion although lock-up restrictions for six months could prevent him from selling or borrowing against his shareholding.
“The valuation of the business is rich relative to its underlying fundamentals, but I would not get in front of it in the near term,” said Thomas Hayes, Chairman of Great Hill Capital.
“This valuation may be more of a proxy on the enthusiasm of supporters for Trump than a reasonable estimate of underlying business prospects.”
TMTG was the second biggest percentage gainer across U.S. exchanges at 10.20 a.m. ET, according to LSEG data. Retail trader-focused social media and trading platform Stocktwits listed it as the most trending stock.
Shares of blank-check firm Digital World Acquisition Corp, which is now TMTG, had surged more than 35% on Monday after completing its merger.
TRUMP’S FINANCIAL WOES
Trump, who is facing four criminal trials in his race to U.S. presidency, has been struggling to raise money for his campaign and legal expenses.
Meanwhile, a pause to a ruling that would have blocked New York state authorities from seizing his assets bought Trump some financial breathing room as he tries to build a campaign war chest and keep his real-estate empire intact.
The deal will inject $300 million cash to Truth Social, which had lost $10.6 million from its operations in the first nine months of 2023.
The company also provides a way for supporters of Trump to bet on his resurgence as a political figure, as evidenced by shares of shell company Digital World Acquisition nearly tripling in value this year.
A Reddit user Chester-Ming posted “the (Trump) hype has the potential to offset everything – shitty fundamentals, insane dilution and more”, on 15 million-large “wallstreetbets” investor forum, although the user warned that Trump could potentially cut his stake.
Digital World said in a filing last month that Trump may divest his stake in Truth Social and cease any involvement in its management based on how his bid for president goes.
The special purpose acquisition firm signed its merger agreement with Trump’s company in October 2021 and since then has been the target of investigations by the U.S. Department of Justice.
It reached an $18 million settlement with the U.S. securities regulator over inaccurate disclosures in July last year.
Shareholders voted in favor of the deal last week, more than a month after the regulator gave the green light for the deal.
